Ukraine is one of the leading producers and exporters of wheat, barley and corn in the world. According to data of U.S. Department of Agriculture Foreign Agricultural Service (USDA FAS), Ukraine which has 24,7 million tons of wheat production in 2014/15 season reached 27,2 million tons in 2015/16 season. But, first predictions about 2016/17 point out that wheat production will decrease in the country and realize around 26,8 million tons.
Ukraine which is the largest country entirely within Europe with its area, has a worldwide presence in the production and trade of cereal products. The country, which realized 20-25 million tons wheat production, 25-30 million tons corn production and 9-10 million tons barley production every year, is home to more than 1,300 mills. But the contraction in the domestic market and especially in the decline in consumption are pushing flour producers. In this process, some producers find solution giving importance to the overseas market, some small-scale businesses lose power and withdraw from the market.
THE IMPORTANCE OF GRAIN PRODUCTION IN UKRAINE
Ukraine is one of the 10 largest wheat producers in the world. According to data of U.S. Department of Agriculture Foreign Agricultural Service (USDA FAS), the country which realized 24,7 million tons wheat production in 2014/15 season, alone realized 4 percent of world wheat production. But, USDA points out that wheat production will decrease in the country and realize around 26,8 million tons in January and February forecast.
Reports of International Grains Council (IGC) and UN Food and Agriculture Organization (FAO) support forecast of USDA. According to data of International Grains Council (IGC) in February, it predicts that Ukraine’s wheat production amount will be 1 million tons (26,8 million tons), fewer than the previous year. FAO’s report estimates this decline as 2 million tons (26 million tons). The country used 45 percent of wheat (12,3 million tons in 2015/16 season) for domestic consumption and exported the remain.
Ukraine, which has a voice in the production of corn as it is in wheat, realized 28,4 million tons of corn production in 2014/15 season according to USDA data. The country which realized 23,3 million tons of production in 2015/16 season with a decline of 4 million , ranks 7th in the world corn production. But unlike wheat, the forecast for Ukraine’s corn production in 2016/17 is high. USDA reports predict that the country’s corn production will increase 28 million tons next season. IGC’s February report supports this forecast.
As mentioned above, another prominent product in Ukraine’s grain production is barley. According to data of USDA, Ukraine which ranks 3rd in the World barley production in 2014/15 season with 9,4 million tons, didn’t keep this production amount and it declined 800 thousand tons. But, despite this, it rose to 2nd in world ranking with 8,7 million tons of production. According to the data of USDA, Ukraine’s barley production will be 9,9 million tons with an increase amount of 1,2 million in 20106/17 season.
GRAIN TRADE IN UKRAINE
Ukraine which is one of the world’s 10 largest exporters, dominates the prices in the world grain market. According to the data of USDA, Ukraine which exports 11,2 million tons of wheat, flour and products increased this amount to 17,4 million tons in 2015/16 season and ranked 6th in world wheat, flour and products export. In 2016/17 season, forecasted export amount for the country is 16,5 million tons as parallel to decline in production. IGC’s February report supports this and forecast for 2016/17 is 15,7 million tons. According to the data of FAO, the export amount is lower with 15 million tons.
Ukraine which usually ranks 3rd in world corn export, exports 20 million tons corn in 2103/14 season. But, in the next seasons corn export decreased as parallel to decline in production. According to the USDA’s report, Ukraine corn export which decline 19,6 million tons continued to decline and remained 16,5 million tons. For 2016/17 season, USDA predicts an increase of 1,2 million tons (18,7 million tons). But, it seems that reaching the amount in 2013/14 season is not impossible.
Country’s barley export continues to rise. According to the data of USDA, Ukraine’s barley export which is 4,3 million tons in 2014/15 season, has risen to 4,6 million tons. Ukraine which ranks 3rd in world barley export will be continued this success and increase its export amount to 5 million tons in 2016/17 season.
MILLING INDUSTRY IN UKRAINE
High wheat production is an important contribution to the development of milling industry in Ukraine. But, Ukraine’s domestic wheat consumption is sliding down due to a decreasing population as well as loss of governmental control over the Crimean Peninsula and parts of the territories in Eastern Ukraine. Flour mills in Ukraine are running at approximately 30% of their capacity, and millers are trying to balance shrinking domestic consumption with exports. Small scale enterprises loss their power and withdrawn from the market.
The Union Millers of Ukraine President Rodion Rybchinsky said “1310 enterprises reported about their production of flour in Ukraine, but only 426 of them were classified as the permanent ones. In 2012, the number decreased to 365. To date there is the pool consisting of 30-40 companies being the leaders of industry. Some of them have already clarified the position for working for domestic market only, the other ones consider themselves as the export-oriented ones.
According to Rybchinsky, the companies are developing following their own purposes and market tasks they are being oriented on. So nearly 10-20 enterprises annually leave the market. Thus sooner or later the total number of grain processing enterprises producing flour and cereals will not exceed 100.
FLOUR INDUSTRY IN UKRAINE
According to the USDA report, Ukraine’s domestic wheat consumption is sliding down due to a decreasing population as well as loss of governmental control over the Crimean Peninsula and parts of the territories in Eastern Ukraine. Flour mills in Ukraine are running at approximately 30 percent of their capacity, and millers are trying to balance shrinking domestic consumption with exports.
A fall in domestic bread consumption is forcing Ukrainian millers to increasingly sell to international markets. For market year 2015-16, Ukraine exported 365,000 tonnes of wheat flour and products, an increase of almost 30 percent compared to the previous market year. The major growth destinations are East and Southeast Asian countries. According to the report, the major consumer of Ukrainian flour for this region remains North Korea, which is importing both directly as well as transshipping the commodity through China.
Flour production is referred to the unlicensed business activity, but at the same time, the industry is under constant supervision by the authorities to ensure the food safety control, and the state structures supervising fire and explosion safety of production.
According to statistical data for 2011, 1310 enterprises reported about their production of flour in Ukraine, but only 426 of them were classified as the permanent ones. In 2012, the number decreased to 365 of the permanent enterprises.